Today on CNBC I heard a report of unusual Call buying activity with Applied Material (AMAT). There are tons of the October 20th Calls being bought. I’ve been watching this tech stock for years but haven’t been involved for a long time. Today, after the report I did a Buy-Write. I bought 1000 shares of the stock at $54.05 and sold 10 contracts of the 10/20/17 $54.50 Call options for a premium of 85¢ ($850). This option will expire next week and the Rate of Return for the premium is 1.5% which fits into my “1 Week/1%” strategy. If I get assigned I’ll bring in another 45¢ for $450. If I do get assigned the total gain will be 2.4% or $1300. This trade is a Covered Call on a good stock so it gets a Risk Factor 1.
Buy 1000 Shares AMAT @ $54.05
Sell to Open 10 AMAT 10/20/17 $54.50 C @ 85¢ (+$850)
Steve
The Options Coach
I bought some AMAT at $53.75.
Price went down to $53.39 so I purchased 50% more shares.
I use VectorVest as my guide with a pretty good success rate.
Then as the stock price bounced back, I sold $54.5 CC for $.62 premium.
The shares were called away from me as the price closed north of $56